Housing affordability across Canada has improved for a record 10 consecutive quarters, marking a historic turnaround for homebuyers struggling with the cost of shelter, according to new analysis from National Bank of Canada.
The mortgage payment on a representative home has fallen to 51.1% of median household income in the second quarter of 2026, the lowest threshold in approximately four years. This represents a significant 1.1 percentage-point improvement from the previous quarter.
From Rate Relief to Price Declines
What makes this quarter particularly noteworthy is a fundamental shift in what is driving affordability gains. Through much of 2024 and 2025, declining mortgage rates powered the recovery. Now, the script has flipped: falling home prices are doing the heavy lifting.
In the second quarter of 2026, a seasonally adjusted 2.1% decline in home prices reduced the mortgage-payment-to-income ratio by 1.1 percentage points. Rising household incomes contributed an additional 0.4 percentage points of improvement, while higher mortgage rates—which increased seven basis points during the quarter—offset some gains with a 0.4-point deterioration.
"This shift from rate-driven to price-driven affordability gains was particularly evident in Vancouver and Toronto, where sizeable price declines generated the largest affordability gains among the markets covered," National Bank economist Kyle Dahms noted in the bank's latest Housing Affordability Monitor.
The Long Road Back
Since affordability hit its worst point at 62.5% of median income in the fourth quarter of 2023, the ratio has plunged 11.4 percentage points. National Bank's analysis reveals that lower mortgage rates contributed 5.1 percentage points of that improvement, rising household incomes added 4.2 points, and falling home prices accounted for 2.1 points.
Despite these gains, the nation remains far from comfortable. Affordability is worse than its 20-year historical average in all 10 metropolitan areas tracked by the bank. Nationally, the composite ratio sits 10.4 percentage points above its average since 2000.
The Affordability Divide
Vancouver remains Canada's least affordable market, with mortgage payments consuming 79.4% of median household income. Victoria follows at 73.9%, Toronto at 68.3%, and Hamilton at 57.5%. Hamilton, Victoria, and Quebec City have the largest gaps relative to their long-term averages, each exceeding 14 percentage points above historical norms.
During the second quarter, affordability improved in six markets: Vancouver, Toronto, Hamilton, Calgary, Ottawa-Gatineau, and Victoria. Conditions deteriorated in Quebec City, Winnipeg, Montreal, and Edmonton, where home prices continued climbing despite broader national trends.
Toronto saw a significant 2.5-percentage-point improvement as its representative home price fell 3.6% in a single quarter. Vancouver's affordability ratio improved by 2.6 points following a 2.9% price decline, providing relief to one of Canada's most pressured housing markets.
Data sourced from Canadian Mortgage Trends via National Bank of Canada's Housing Affordability Monitor, Q2 2026.